Outlook 2006: Consumer Products

The Challenge Consumer products companies have been wrung out by, on one side, Wal-Mart insisting on fast production and cheap prices, and on the other, Chinese manufacturers, which can do almost everything faster and cheaper. Indeed, 70% of Wal-Mart's inventory is made in China.

What You Can Do Rather than competing on price, more companies will now compete on quality. "We're noticing something of a shift away from the Wal-Mart effect," reports Brent Lippman, CEO of Khimetrics, a Scottsdale, Ariz., maker of software that businesses such as PetSmart and Albertsons use to analyze their customers. "Wal-Mart's very important and big," he says, "but some of our customers are able to gain back a little market share by providing better service, and not trying to chase after everyone." For example, instead of trying to sell to everyone through Wal-Mart, companies are experimenting with specific products for specific markets without spending a ton. Rapid injection molding, which combines new modeling software with speedy manufacturing, can spit out up to 1,000 working parts in fewer than 15 days, where standard rapid prototyping takes up to five days to make just a handful of products. "It allows people to adjust their designs for a smaller and smaller market," says Bradley Cleveland, CEO of Protomold, a Minneapolis-based rapid-injection-molding company.

The design of the products, too, flouts Wal-Mart conformity. "Some clients are pushing us to do it faster because they just need to stay on the shelf at Wal-Mart, but our clients that are able to think about it a little bit differently are asking us not just to do it faster but better: 'Let's really understand the needs of the customer," says Kevin Young, director of industrial design at Design Continuum, a Boston firm that handles design for Master Lock and OXO, a maker of kitchen tools. Simplicity and authenticity are the hallmarks of this movement. For example, look to iRobot's Scooba, an automatic floor washer that hits stores this month. (Burlington, Mass.-based iRobot started researching floor washers after customers complained they hated mopping; iRobot is betting these customers will pay $399 to avoid the chore.) The Scooba has just two buttons--power and clean. Pressing clean sends the Scooba into a four-step minuet, sweeping, washing, scrubbing, and drying the floor. As for authenticity, the Scooba is made of plastic, and it looks as if it's made of plastic; in years past, it might have been painted steel gray to look like it was made of metal. "There's a trend to have products be a little more true to what they are," Young says.

What Insiders Watch

Weekly chain-store sales are measured by Redbook Research (www.redbookresearch.com) and the International Council of Shopping Centers (www.icsc.org). Both are usually reported by Reuters, AP, and financial-news organizations.